Bank Leumi May Face Over $300M to Settle Tax Evasion Case

Benjamin Lawsky has changed the legal landscape for Bank Leumi Le-Israel.

A source revealed that in order to settle the investigation into whether Bank Leumi Le-Israel (LUMI) BM helped Americans evade taxes, New York’s banking regulator will ask for over $300 million.

The head of the state’s Department of Financial Services, Benjamin Lawsky, is looking for an amount that surpasses what the bank set aside to rectify a different criminal probe by the U.S. Justice Department. In June, Leumi said it issued $254 million (950 million shekels) to the federal matter, which would make it the first Israeli bank to resolve a tax investigation with the U.S.

With other banks, Lawsky has taken a comparably fervent approach.  In May, Credit Suisse Group AG (CSGN)’s main bank subsidiary, his office secured $715 million of the $2.6 billion penalty as part of a guilty plea.

Bruce Zagaris, an attorney at Berliner, Corcoran & Rowe LLP who specializes in international tax matters, said, “Lawsky has certainly raised the stakes. It has complicated the effort to settle, because in some cases Lawsky’s office has different views than the feds.”

According to a filing with the Tel-Aviv Stock Exchange, Israel’s second largest lender by assets, Bank Leumi, said today it’s in discussions with Lawsky’s department trying to come to an agreement. The bank said that it’s too early to determine if a resolution will be reached and a final settlement may be “significantly higher” than the provisions that have already been allocated to cover those costs.

As of 1:21 p.m. on October 29 in Tek Aviv, Leumi fell 2.1 percent to 13.82 shekels, which is the lowest since August 31. This won it the spot of worst performer on the benchmark TA-25 index, which was down 0.3 percent.

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